Baroness Elles: My Lords, I am most grateful to my noble friend for giving way. I cannot quite understand his argument. Is he arguing that we should have simple majority rather than a blocking minority which might stop some of these changes? If one has a simple majority, one gets one's change of the CAP with no problem at all. I hope that my noble friend can clarify the argument he has used.

Lord Pearson of Rannoch: No, my Lords, my noble friend, if she bears with me, will come to realise that I am advocating that we leave the treaty altogether. In the meantime I am pointing out the difficulty of getting change under the voting system as it is. I do not think that the blocking minority of 26 votes is sufficiently considered when Ministers say that they are going off to Brussels to argue for this, that and the other, which a comfortable blocking minority does not want to change.

This brings me to my remaining questions about our negotiating position at the intergovernmental conference. The fact is that we simply have not dared

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to take an objective look at whether we would retain access to the single market if we withdrew from the Treaty of Rome itself. Withdrawal from the Treaty of Rome does not seem to me to be such a terrifying prospect. After all, Norway is booming, and so is Switzerland which now exports three-and-a-half times per capita to the Communities than we do, even after one leaves out her banking activities. Of course I accept the point of my noble friend Lord Cockfield that the volume of our trade with Europe--whatever that turns out to be--is important to us. However, we trade in deficit with Europe. Therefore I cannot see why Germany, France and the others would want to cut off their noses to spite their faces and start any kind of trade war against us if we left the treaty. If they did, they would find the currency markets making their lives uncomfortable quickly and of course, more importantly, they would be breaking the GATT which we signed collectively with our European partners, but also individually as sovereign states.

I wonder whether my noble friend can tell the House which treaty the Government regard as being superior, the GATT or the Treaty of Rome, or, to put it more simply, would the GATT hold if we left the Treaty of Rome? When I have put these sort of questions in the past I have been told that the Government consider the advantages of our membership of the Union to be so self-evident that we should not dream of leaving the treaty, or even of carrying out a cost benefit analysis to see whether Swiss or Norwegian status might suit us much better. The Government trot out the mantra of all the inward investment which they claim we have enjoyed because of our membership of the Union. But did that investment come to us because of our access to the single market, our good labour relations, our low inflation, our low corporate taxes and because we speak English, and not because we bear the disadvantages of Union membership as well? Those are the sort of questions which an objective cost benefit analysis would start to answer.

One of the Government's favourite statistics is that this foreign investment has brought us some 650,000 jobs. I find it interesting that that is precisely the number of jobs which the Government hold to be at risk from the BSE scare, so thoughtfully stoked up by our friends in Europe. I fear that without such an analysis we enter the IGC negotiations not knowing the point at which we are prepared to get up and leave. As I mentioned in our debate on 12th December last, no sane businessman would do such a thing. In that debate I also mentioned the strength of Article N of the Treaty which allows us to prevent any treaty change with which we do not agree.

It is this power which brings me to monetary union which is clearly on the agenda at the moment, if only because--thank goodness!--it is not working at all as the Maastricht Treaty envisaged. In fact Article N, together with Articles A and B to which it refers back, make it clear that monetary union could be on the IGC agenda if we wanted it to be. Whether or not it reaches the IGC agenda, it is the wounded beast of monetary union which looks certain to give the Government a rare opportunity to extricate this country from the quaking

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bog of the treaty to which I have referred. I suggest this because the convergence criteria for EMU are clearly in trouble. In fact at the moment it looks as though only Luxembourg may meet them. Yet it seems certain that the French and German Governments, and maybe one or two others, will still be determined to proceed with EMU even if they cannot meet the necessary treaty criteria. They will therefore need to slip the criteria and delay the starting date or otherwise change the treaty, but this they cannot do without our consent unless they sign up to an entirely separate treaty, supported by a separate bureaucracy with all the costs and public difficulty which that would cause, and which I, for one, am convinced they would not do.

That is the trump card which is in effect already lying on the table in front of Her Majesty's Government. The Government have shown that they understand the game because they have wisely dismissed the unfortunate suggestions made in Verona that we should volunteer for some new form of suicidal exchange rate mechanism in the happy event that we and others manage to avoid EMU itself. But I am asking the Government to play the game to its now logical conclusion. The desire on the part of some of our European partners to proceed with the folly of EMU appears to be so strong that our price for allowing them to do so should be high indeed. In the view of what appears now to be a growing majority of the British people, that price should be our continued access to the single market after our calm and confident withdrawal from the Treaty of Rome, and our elevation to the relationship with Europe which is at present enjoyed by Switzerland. I can but urge the Government to examine this card carefully and then to play it with vision and with courage.

8.7 p.m.

Lord Moran: My Lords, I welcomed a good deal of what the noble Baroness said in her helpful speech introducing this debate. The White Paper is in my view a good document--clear, robust and persuasively argued. If this is to be the Government's attitude throughout the IGC negotiations we have little to worry about. But will the Government stick to their guns? All too often, whether it is Northern Ireland or Europe, the Government have started off with an admirably firm statement of their approach and then, when they came under pressure, have progressively given more and more way. To do that in this IGC would be a disaster.

Unanimity is required in the IGC for any substantial changes and it is vital that the Government should stand their ground, decline to appease the clamour of the federalists and argue for the sensible changes they have themselves proposed. In that context the noble Lord, Lord Bruce of Donington, told us about the association of the European Parliament with the IGC. What he said was disturbing. I do not think it will do simply to make the compromises advocated by the noble Lord, Lord Cockfield.

I pointed out after the repetition of the Statement of the Foreign Secretary by the noble Baroness on 12th March that the Government's proposals were very much in line with the recommendations of your Lordships' Committee on the 1996 IGC, of which I was

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privileged to be a Member. We, too, were against an extension of qualified majority voting, against more powers for the European Parliament and against any abandonment of the purely intergovernmental nature of co-operation on foreign and security policy, justice and home affairs. What I think was significant was that these recommendations were made by a committee on which the whole range of views on Europe were represented and on which those of us who could be described as Eurosceptics were a small minority. I hope that the Government will take careful note of that.

There is, however, a strange contradiction in the Government's approach. Given the White Paper's emphatic rejection of what it describes as,

"an even closer Political Union in the sense of an inexorable drift of power towards supra-national institutions, the erosion of national parliaments, and the gradual development of a United States of Europe",

the Government's declared determination in the White Paper,

"to safeguard the powers and responsibilities of the nation states",

and the passage in the Statement repeated by the noble Baroness that,

"the Government are totally opposed to a monolithic, centralised, federal Europe",

how could they have put their signature to the Maastricht Treaty, which was a blueprint for the achievement of economic integration leading inexorably to political integration and a single European state?

The White Paper says that,

"there is no fixed agenda for the IGC",

but that economic and monetary union,

"is not expected to be discussed at the IGC".

Nor apparently is the common agricultural policy. It seems odd that in a conference designed as a follow-up to Maastricht there may be no discussion of EMU, the heart of the treaty or of the most important question now facing the EU, that of a single currency.

I have on a number of occasions argued in this House that a single currency must lead to a single country. Most Germans have always been clear about this. Recently Professor Otmar Issing, the chief economist of the Bundesbank, said that a single currency would not be credible without a single European superstate, and he made exactly the point that I have sought to make in this House; namely, that there is no example in history of a lasting monetary union that was not linked to a state entity. Professor Issing went further, saying that the plans for a single currency could destroy the Union because they are so misconceived.

Given the clear views expressed in the White Paper about the Government's total opposition to a centralised Europe, I find it hard to understand why they do not rule out our adopting a single currency, which would lead precisely to the centralisation to which they say they are opposed.

The Cabinet's decision to have a referendum if it and Parliament were to decide to get rid of the pound and adopt the euro is no substitute for a decision now. It is not the referendum that I have all along wanted--which

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is a vote on whether we should continue down the path towards a European state or should stick to co-operation between sovereign states.

One problem which is on the IGC agenda is the common fisheries policy, about which the noble Baroness, Lady Wilcox, spoke in her splendid maiden speech. On 12th March the noble Baroness commended to me paragraph 65 of the White Paper. I recognise the Government's determination to work for changes, but I do not see how they can hope for a solution in the IGC. Treaty changes require unanimity, and why should we expect Spain and the Netherlands to share our objections to quota hopping? We should, I believe, have realised immediately that the European Court's Factortame judgment knocked the bottom out of the CFP, based as it is on national quotas and what is called "relative stability", and insisted straightaway that in the light of the Court's decision the CFP should be abandoned or drastically amended.

But now suddenly the whole situation has altered. BSE has, I think, been a watershed. It has at last dawned on the British public to what extent we have already ceased to be masters of our fate. It began with fisheries, when we were not only forbidden to preserve British national quotas for British fishermen but are to be forced to compensate the foreign boats we temporarily prevented from masquerading as British boats. Then on trade we find that we are forbidden to export to any country in the world even those products which are described by the World Health Organisation as perfectly safe. The Community's ban on our exports of animals and products has been described by the Government as:

The spectacle of our "partners"--and the word now is almost always put in inverted commas--maintaining this monstrous world-wide ban and demanding the wholesale slaughter of British cattle without any scientific justification, described by the British Veterinary Association as on a par with the burning of witches, has shocked people in this country who realise perfectly well that our "partners" stand to gain enormously if they can bring about the destruction of our cattle industry. I have not observed any of them declaring their national interest. And Herr Klaus Kinkel has openly linked the ultimate prospect of the lifting of the ban with a demand for concessions by the UK at the IGC--in other words, the abandonment of the stance set out in the White Paper. A more blatant attempt at blackmail it would be difficult to imagine. One might be forgiven for thinking that our "partners" really wish to do us down, or perhaps to drive us out of the EU. Certainly it is hard to discern any sign that they might be our friends.

I do not really see how we can go on like this. I cannot imagine that the British people will continue indefinitely to turn the other cheek when they are constantly abused by commissioners and leaders of European governments, and when in vote after vote we are one against 14. I fear that for too long the Government have pretended that things are otherwise than they actually are. The fact is that, as the noble Lord,

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Lord Beloff, reminded us, for historical and geographical reasons we have a different agenda from other European governments, different objectives and a different vision. It is not true, as the Government have often said, that the tide is flowing our way and that other governments are coming round to our view. The gulf is as wide as ever. It may well be unbridgeable.

I fear that viewed from this island the EU is becoming not merely irritating but positively unreal. Just this past week we have had the ineffable Herr Bangemann emerging from the woodwork to call for the UK to abandon the three-pin plug, at huge cost, in the interests of harmonisation. Then even so enthusiastic a Europhile as Mr. Kenneth Clarke must have wondered at Verona whether his European colleagues were serious in expecting him to go back into an ERM, while the Commission apparently suggested that it might supervise national budgets; and the vets and politicians dealing with beef have lost all contact with scientific reality. News from Brussels seems more and more like the communications many of us receive from L. Ron Hubbard or the Transcendental Meditationists at Mentmore.

Writing last month in the Sunday Telegraph Sir Charles Powell said that his years working at No. 10 had taught him:

"never knowingly to underestimate the remorseless resolve of Europe's institutions--the Commission, the Court and the Parliament--to extend their powers at the expense of Europe's nations".

His conclusion--which is interesting in the light of what the noble Lord, Lord Cockfield, said earlier--was that after we have seen how the IGC works out and whether,

"effective barriers against future unwarranted intrusion by Europe can even at this late stage be constructed in co-operation with other member states",

we may need to amend the European Communities Act 1972 to make it clear that Parliament,

"can by express provision override Community law",

just as the German constitutional court has held that in certain circumstances its judgments take precedence over those of the European Court. I think that if the European institutions, along with Chancellor Kohl and his associates, continue to press for ever further and more rapid progress towards economic and political integration, we may well need to act as Sir Charles has proposed, though now perhaps sooner rather than later, or in the last resort to consider leaving the Union in favour of a primarily economic association like that of Norway, to whose current happy state the noble Lord, Lord Stoddart of Swindon, drew our attention.

I was in Norway twice last year. It was a strange feeling being in a free country which was able to decide for itself how to deal with its problems and what policies to pursue. That was once the position in this country. But now we are forbidden by others even to export fruit pastilles to the rest of the world. We are shackled. I think the time has come when we should set about regaining our freedom.

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8.19 p.m.

Baroness Elles: My Lords, each member state has its own political objectives and approach to this current IGC. Many of us are grateful to the Government, and in particular to my noble friend Lady Chalker, for introducing the report today and for the general debate on the issue. We in this House have the benefit of considerably more time to debate this important issue than the rather short time that was given to it in another place. The Minister will have an opportunity to pick up the wide range of views from speakers such as the noble Viscount, Lord Tonypandy, and my noble friend Lord Kingsland, who assumes--wrongly, I believe--that we are already within reach of being a federal state. We are not, nor shall we ever reach that goal, which is one that we ought not to consider. A wide range of views on broad issues have been expressed.

There are two improvements which all member states of the Community would wish to see come out of the IGC. The first is an increase in the efficiency of the Community's institutions. The second is the taking into account of the prospect of the future enlargement of the EU. Enlargement is an objective of the United Kingdom in particular.

I wish to make a few general points. We should remember that each time there has been an IGC there has been a step forward in an important direction. The single European market was the last such step and it has almost been completed, largely due to the magnificent work of my noble friend Lord Cockfield. He set out in his own hand the programme which is clearly written in English by him and from which we were all able to benefit.

However, that has its downside. The 300 directives which were introduced in order to form the Common Market have sprouted many regulations to bring about the implementation of some of the directives in detail. When people talk of Europe being close to the citizen, or becoming closer, what has come closer is the number of regulations emerging mainly from the Commission. These were never properly explained to the people of Britain, who were concerned about them. One cannot abolish several hundred national non-tariff barriers in each of the member states and expect them not to be replaced by a European legal norm. Several hundred national regulations have been replaced by single European regulations. That is where so much has been misunderstood about the functioning of the European single market. In order to obtain the benefit of the single market, that legislative process had to be gone through.

Secondly, we forget that the original six states were not only motivated by the fact that each had been occupied by others of the six. They were also motivated towards closer co-operation following the second world war by the threat of the Soviet Union superpower on their eastern border. That somewhat changed the look of Europe in the past few years, wrongly in my view. Since the fall of the Berlin Wall, people's attitudes to the state of Europe have relaxed. As I am sure my noble friend Lady Park will remind us, the state of Russia, with the coming presidential elections, does not allow us to sit back and consider that we are living in a period

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of safety in Europe. It emphasises all the more strongly the necessity for closer co-operation in Western Europe. It is still a vital consideration in the overall perspective of developing and protecting our mutual interest. Therefore, we must still rely on the commitment to NATO for our defence and security. For that reason, I do not believe that there should be any change to the second pillar of the CFSP in the Maastricht treaty, nor the retention of anything but a unanimous vote.

My third point concerns Britain's idea of the enlargement of the EU to include central and eastern European states. That should be tempered by recognition that, when the peoples of Greece, Spain and Portugal sought to enter the European Community, it was to strengthen their return to parliamentary democracy. We must accept that some eastern European states have not reached a stage of pluralist parliamentary democracy such as we know in western Europe. Many of the economies concerned are in no state to withstand the economic development of western Europe. Therefore, I believe that they should be given assistance and help, with continuing European agreement to help them develop their economies and establish democratic parliamentary systems. But the issue cannot be examined in the near future with a view to offering some of those states early enlargement.

In his interesting speech, my noble friend Lord Beloff recalled the history of our great nation. He did well to remind us that we have a centuries-long historical tradition of nationhood which is not shared by many of the member states of the European Community. We cannot ignore that. But, so far as I understood him, my noble friend stopped at the year 1940-41. I too am old enough to remember that year when we were the only state in Europe that was free. For a certain time we had no allies except, eventually, Greece, but we were able to establish and assist in establishing a free western Europe. It is worth recalling a point which has not yet been mentioned: since 1945 our contemporary European history has been a tribute to Britain and other member states in Europe. We decided that, for our own interests--those of people in Britain--as well as of other member states, we must try to co-operate and confirm both the political and the economic stability that we have been able to enjoy since 1945. That is a period of just over 50 years. For all the glib talk about nectarines, oranges and the vegetable and fruit regimes generally, let us remember that there are far more important issues and that they relate to the protection of the people of western Europe.

I wish to deal with a few details, of which one is democratic legitimacy. This is dealt with in paragraph 18 of the White Paper, A Partnership of Nations. There is a list of main issues which will be debated or considered by the IGC and I shall pick out two or three. An important one was touched on by my noble friend Lord Pearson of Rannoch. The point which cannot be ignored is the relationship between the weighting of votes by member states and size of population. My noble friend might have been leading up to that but did not quite reach it. The point relates to the prospect of enlargement of the Union to include a number of comparatively small states. As the number of member

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states increases, an inevitable imbalance between smaller and larger states is created. Whereas for the purposes of QMV by the original six member states in 1957, following the signing of the Treaty of Rome, the population size of the majority reached a minimum threshold of 68 per cent., with 15 member states the threshold is now below 60 per cent. That means that, when there is a qualified majority vote, it can represent less than 60 per cent. of the population voting in favour of the issue in question. That cannot be right if we claim that ours is a democratic system. Unless a change is made to the weight attached to member states' votes, there could, with the future entry of smaller states, be a majority vote representing only about 47 per cent. of the European Union population. That cannot be right, and the issue will be looked at closely during discussions on the procedures of the IGC.

I also wish to comment on comitology, which was established by a decision of the Council in 1987. It is worked by the Commission and national representatives from civil servants of member states. Something which the European Parliament would have liked to deal with but did not have the power concerns the bucketfuls of draft legislation which come through from over 300 management committees. This has no democratic or parliamentary scrutiny. I hope that the Minister will take that problem on board and ensure that a proper process of democratic scrutiny is carried out on the more relevant draft regulations. Some deal with agricultural matters.

Sir Leon Brittan, when he gave evidence to the sub-committee on the IGC, mentioned the different values of the types of regulation and management decisions that go through those committees. Some are extremely important; they affect the rights of individuals. They need scrutiny, just as we have scrutiny in both Houses in this Parliament through either negative or affirmative resolution or certain statutory instruments. It may well be considered that some form of delegated legislation scrutiny committee should be established, possibly consisting of certain Members of the European Parliament together with chosen representatives from each of the national parliaments. These regulations are very important, and the fewer the directives now being adopted the more regulations we are confronted with. This is an important aspect of the legislative process.

My noble friend the Minister quite rightly mentioned the question of European Community legislation and some of the problems that attach to the European Court of Justice, partly as a result of the bad drafting of EC legislation. Very often, at the end of the day it comes in the form of diplomatic or political compromise. That is not the same as having to interpret in law certain texts written and drafted in legal form and which convey definite meanings. That has been one of the problems of the European Court of Justice: it has had to interpret very widely differentiated legal texts which do not have the same detail and authenticity as legislation coming from our own national Parliament.

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The same applies to the implementation in member states of EC legislation. It is not always compatible. I have several times drawn attention to what is now technically termed "gold plating". The Civil Service chooses to add certain original ideas to the texts of directives or regulations coming from the EC that were never intended for inclusion in the legislation in its original form. Again, this matter should be examined very much more closely to see that the texts of EC laws are identical throughout the member states; they are certainly not so at the moment.

The European Court of Justice has been the subject of some comment. I thank the noble Lord, Lord Lester of Herne Hill, for his comments on the work of the Court. Nobody likes to be condemned by a court, particularly one at a supranational level. However, apart from Denmark, the United Kingdom has far fewer indictments by the European Court than any other member state, including Germany, Italy--which has several--France and Belgium. Those four countries, well known for talking of European integration, have a very bad record with the European Court of Justice. The United Kingdom comes out extremely well. Therefore, from the point of view of the UK position, we have no reason to disapprove of the judgments that have come from the European Court.

Let us be reminded that, even in this country, we have seen Ministers who have come under a form of judicial review and who have perhaps not been too keen on the findings of the English judiciary as regards certain matters for which they have been criticised in our own courts. This is a perfectly acceptable approach. If we believe in the rule of law, we must accept the findings of the judiciary and seek to amend our own laws in order to conform to the texts of the treaties and the laws agreed unanimously by member states.

Much has been said about Factortame and the question of Spanish fishermen. The Merchant Shipping Act 1988 was the one Act that had to be suspended on the finding of the European Court of Justice. When it was drafted, many lawyers already recognised that it was totally contrary to the provisions of the treaty. I accept that the Government introduced that Act in good faith, but it was not in accordance with the treaty. The Court had no alternative but to decide that it was discriminatory on national grounds under the then Article 7 of the EEC treaty. It is easy to condemn the judgment, but there are perfectly good legal reasons why it was fair.

Perhaps I may mention one or two matters concerning the ECJ which need examining. Certainly, there will not be enough judges to deal in the court of first instance with the number of cases coming up, which will delay findings handed down by the court, particularly if there is to be enlargement.

Secondly, there are those who condemn the supremacy of the European Court. It is surely unthinkable that decisions can be passed down by a court that are acceptable in only one country and are totally irrelevant in another. If we are to have European Community law, it must be the same and it must be respected throughout all member states. That is a perfectly acceptable policy.

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The problem of the temporal effect of judgments quite rightly concerns the Government. It is untenable to have a piece of legislation which has been in force, let us say, since 1973, in relation to which a judgment gives a different interpretation to the one that has been current throughout the member state. It would be reasonable, therefore, to consider whether judgments handed down could take effect as from the date of the judgment. There may be an alternative way of dealing with the problem, but it certainly needs examining. It was already accepted in principle in the provision in the Maastricht Treaty in regard to the Barber case. This is not creating a new precedent; it is perfectly justifiable for the Government to see whether they can get some agreement on the issue.

There are many other issues. The rule of law is the most stable element of our European Community system. I believe that the maintenance of peace and political stability within our western European region, the continuing of a pluralist parliamentary democratic system in each member state, and respect for the rule of law, are basic to our European way of life. I hope that we shall continue to share that way of life with our European partners. I wish my noble friend the Minister and the Government the best of luck in proceeding with the IGC to a satisfactory outcome in the interests of the British people.